In 1920 one senior official in the Foreign Office was predicting that "within three years Ireland would be a republic in all but name and in less time than that all the British troops would be out of Ireland." With regard to the 26 Counties he was accurate.

On the eve of 1998, Tony Blair has, as Lloyd George did before him, seemingly abandoned the notion that a settlement with moderate nationalism is possible. Thus, just as Lloyd George sat down with the bloodthirsty Michael Collins, so Blair invited through his hallowed portals a Sinn Fein delegation which has, in total, spent a working life behind bars for terrorist offences.

Unionists eschew any comparisons with 1922. While the paramount faction in Sinn Fein, though heavily bloodstained, was then the only available authority in most of Ireland, today Sinn Fein represents one in six adults at most in Northern Ireland.

Recent incidents and ominous warnings from militant loyalism have served as a reminder that Sinn Fein's accessory army is not the only one with its fingers on the trigger. At the same time, Sinn Fein does not, unlike in 1922, resemble a credible alternative authority. The prospect of Sinn Fein forming part of any administration in Northern Ireland, for which unionism has prepared itself on an intellectual level, seems distant, perhaps to Sinn Fein itself most of all.

The demeanour of Gerry Adams in Downing Street was not one of a man who will find it easy to settle into the role of chairman of an allparty fair shares committee on housing or the environment. War leaders frequently make poor administrators in peacetime but this, as Adams knows, is all that is available to him.

Sinn Fein is being let down gently, too gently at times, but even Irish officials speak of the political process as Adams's best chance of an honourable way out of an unwinnable conflict.

Tony Blair's reiteration to the Sinn Fein delegation of the central themes of his Balmoral speech will have dissuaded the republicans of any lingering phantasms of the British Government as a "persuader".

The deal on offer to Sinn Fein was always equality of treatment, the offer of a commensurate role in a new administration, a relaxation of the security presence, an investment package disguisedly targeted at republican areas and, perhaps last of all, progressive movements on prisoners.

For the ideologues in republicanism the British government has recast the formula for the Union into one which rests upon the democratic will of the people of Northern Ireland and underscored by a referendum in the Republic, expressed in new structures of government. But, crucially, those structures, so far as the British government is concerned, have no internal transitional nature.

Sinn Fein has, in the last days before the Christmas recess, only postponed consideration of a new Northern Ireland assembly. Many non-republicans are pessimistic of the chances that Adams can convince his support base that an assembly would have characteristics sufficient for him to portray it as a genuinely Irish structure.

But, as one Cork Sinn Feiner noted regretfully recently, the promise of a referendum in May is a double-edged sword for republicans. The Catholic population, and not just what republicans see as the "Uncle Toms" who vote SDLP, will almost certainly vote for a package which holds out the prospect of peace.

Recently at dinner a guest propounded the view that nationalists want a settlement without needing one while unionists needed a settlement but did not want one. As a thesis it is a curate's egg.

Many parties at the talks have remarked upon the increased level of bitterness and sectarianism in the wider community which has paradoxically accompanied the peace process.

Both unionists and nationalists outside Stormont, increasingly confused by the mixed signals filtered out to them through the media, have become disenchanted by the process and ponder darkly about civil war in the event of a collapse in the talks.

There is a frightening feeling that if negotiation fails a new balance of forces, if only as a temporary settlement, will be found on the streets. The New Year is not looked upon with unqualified relish.

Catholics, in particular, but also unionists west of the Bann, are acutely conscious of the likely consequences, based on communal memories of previous outbreaks, of wanton sectarian skirmishing.

Ordinary unionists are also, unjustifiably, pessimistic about their collective position. As in business, so it is in politics: the last refuge of the bankrupt is creative accountancy.

Tim Pat Coogan almost weekly prophesies the demographic eclipse of Protestants and then extrapolates from this a nationalist majority in Northern Ireland.

His number-crunching based on the 1991 census is ignorant of the vital footnotes: the figure for Protestants in Northern Ireland includes only Anglicans, Presbyterians and Methodists. The column marked "Others" includes Free Presbyterians, Baptists, Lutherans, Pentecostalists and a hundred other types of evangelical.

If Tim Pat Coogan were to be believed, Rev Ian Paisley is not a Protestant!

Coogan's broad-brush approach further ignores the fact that the Catholic community is much more heterodox in its political preferences. Only a minority of Catholics favour a united Ireland. Many tacitly support an arrangement within the framework of the Union but vote for a nationalist party out of sectarian advantage: the SDLP will stand up vociferously for the rights of Catholics per se in the cultural, employment and educational fields. This poses an obvious challenge to traditional unionism.

Whether or not mainstream unionism can take the other step being asked of it - to meet the leaders of Sinn Fein - is an open question.

The onus is upon Sinn Fein to convince the leaders of unionism that they will not be in talks with Sinn Fein one morning and targeted by the IRA the next.

While the leadership of unionism is conscious of the weakness of Adams's position, David Trimble is not immune from criticism either and the absence of any remorse on the part of the republican movement for its campaign of violence, so utterly unjustified by international political and moral standards, remains a barrier.

While Gerry Adams disputes comparison with Michael Collins, he will have noted David Trimble's admiration for the pragmatism of Sir James Craig. He knows what is required.

The author is special adviser to the Ulster Unionist Party deputy leader, John Taylor, MP